Analog chip manufacturer Texas Instruments (NASDAQ: TXN) beat Wall Street’s revenue expectations in Q1 CY2026, with sales up 18.6% year on year to $4.83 billion. On top of that, next quarter’s revenue guidance ($5.2 billion at the midpoint) was surprisingly good and 7.1% above what analysts were expecting. Its GAAP profit of $1.68 per share was 23.1% above analysts’ consensus estimates.
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Texas Instruments (TXN) Q1 CY2026 Highlights:
- Revenue: $4.83 billion vs analyst estimates of $4.53 billion (18.6% year-on-year growth, 6.6% beat)
- EPS (GAAP): $1.68 vs analyst estimates of $1.36 (23.1% beat)
- Adjusted EBITDA: $2.46 billion vs analyst estimates of $2.12 billion (50.9% margin, 15.7% beat)
- Revenue Guidance for Q2 CY2026 is $5.2 billion at the midpoint, above analyst estimates of $4.86 billion
- EPS (GAAP) guidance for Q2 CY2026 is $1.91 at the midpoint, beating analyst estimates by 21.2%
- Operating Margin: 37.5%, up from 32.5% in the same quarter last year
- Free Cash Flow was $1.40 billion, up from -$274 million in the same quarter last year
- Inventory Days Outstanding: 211, down from 224 in the previous quarter
- Market Capitalization: $212.3 billion
Company Overview
Headquartered in Dallas, Texas since the 1950s, Texas Instruments (NASDAQ: TXN) is the world’s largest producer of analog semiconductors.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Texas Instruments’s 3.6% annualized revenue growth over the last five years was mediocre. This was below our standard for the semiconductor sector and is a tough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Texas Instruments’s annualized revenue growth of 4.8% over the last two years is above its five-year trend, suggesting some bright spots. 
This quarter, Texas Instruments reported year-on-year revenue growth of 18.6%, and its $4.83 billion of revenue exceeded Wall Street’s estimates by 6.6%. Beyond the beat, this marks 5 straight quarters of growth, implying that Texas Instruments is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 16.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9.3% over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below the sector average.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Texas Instruments’s DIO came in at 211, which is 21 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.
Key Takeaways from Texas Instruments’s Q1 Results
It was good to see Texas Instruments beat analysts’ EPS expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 7.4% to $253.52 immediately following the results.
Texas Instruments may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
